Crypto Markets React to Labor Department’s Historic Payroll Revision
The cryptocurrency market has recently faced significant turbulence following a surprising revision from the U.S. Labor Department. A downward adjustment of 911,000 jobs for the year ending March 2025 marks the largest annual revision in history, even surpassing the turbulence seen during the 2009 financial crisis. This staggering figure has sent shockwaves through the crypto ecosystem.
Immediate Impact on Major Cryptocurrencies
In the wake of this news, Bitcoin saw a notable drop back to the $111,000 range after briefly trading above $113,000. Ethereum, too, faced a sell-off, leading the cumulative crypto market cap to dip below $3.9 trillion. Despite Ethereum’s recent dominance among the top ten cryptocurrencies, increased selling pressure has overshadowed its position. Data from Coinglass revealed that over 169,000 traders experienced liquidations in just the last 24 hours, with total liquidations—covering both long and short positions—surpassing $342 million.
Liquidation Insights
Within the past day, over $64 million in positions were liquidated. More tellingly, around 81% of liquidated positions—approximately $52 million—were long bets. This stark data suggests that many traders had anticipated a rebound in the crypto market, only to be caught off guard by the disappointing jobs report.
Exceptions in a Downward Trend
Interestingly, while Bitcoin and Ethereum were under pressure, some cryptocurrencies managed to decouple from the prevailing bearish trends. Solana and Dogecoin showed marginal gains, while Ethena experienced an impressive 8% jump over the last 24 hours, trading around $0.82—marking a remarkable 21% increase in a week. Similarly, Hyperliquida saw a 6% uptick during the same period, continuing its bullish momentum.
Fed Rate Cut Expectations on the Rise
This historical labor market revision reflects a concerning reality: the labor market appears weaker than previously reported. According to the Kobeissi Letter, significant job losses were notably concentrated in consumer-facing sectors, with 176,000 jobs lost in Leisure and Hospitality and 226,000 in Trade, Transportation, and Utilities. The total overstatement of private hiring reached a staggering 880,000 jobs—an indication of economic vulnerability not witnessed since the Great Depression or the downturn accompanying the pandemic in 2020.
The implications are substantial. The revisions indicate a two-month net adjustment outside of 2020 that is the largest recorded, with payrolls for May and June cut by 258,000 jobs and an additional 27,000 trim noted this week. Notably, the U.S. economy has shed over 142,000 jobs in four months, excluding those in healthcare.
“This now marks the largest revision in history, even above 2009 levels. In 2009, the US revised -902,000 jobs out of 12 months of already reported data. We are now seeing revisions that are larger than the largest financial crisis outside of the U.S. Great Depression.” — The Kobeissi Letter on Twitter
Potential Impacts on Monetary Policy
In light of these developments, there’s rising speculation around the Federal Reserve’s monetary policy. Expectations are building for a possible 25-basis point rate cut during the upcoming meeting. Should this occur, it would signal the first Fed rate cut in over 30 years, all while the Personal Consumption Expenditures (PCE) inflation remains at or above 2.9%. Such actions could have far-reaching effects on both traditional and cryptocurrency markets, influencing trader sentiment and investment strategies.
This intricate interplay between evolving economic conditions and the cryptocurrency market underscores the volatility and unpredictability inherent in this fast-paced ecosystem. As traders navigate these turbulent waters, keen observation of both labor market indicators and Fed decisions will play a critical role in shaping future market trajectories.
